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Category: Lee’s Free Thinking

You get what you pay for.

The Exact Situation I Had Forecast Is Here, and It’s Grave 2/26/21

Primary Dealers were holding record levels of inventory with record levels of leverage since late Q3 2019. It was all hunky dory as long as bond prices were rising, or at least stable. The mirror of that is yields falling, or stable.

Ever since then I regularly warned about this in my Liquidity Trader reports. I said that it’s a two way street, and that when the inevitable decline in Treasury prices started, it would devolve into big margin calls to the dealers.

Yet Another Comeback 2/24/21

S&P futures are mounting another comeback attempt this morning in Europe, aided by $55 billion in quasi QE from the US Treasury yesterday, with another $41 billion coming tomorrow and $25 billion next Wednesday. Just one problem –of many– the money ain’t going where the Treasury wants it to.

And that is a catastrophic problem for our financial stability.